2 February 2011
IN THIS ISSUE
Quintas Quarterly Newsletter - Spring 2011
Introduction
It’s All About Your Brand!
Recent Investment Success
Changing times for the Golf Industry
Quintas Wealth Management, Director of Sales and Distribution, Nick Charalambous outlines how he and his team are planning to assist clients in 2011
Why Cash isn’t life or death – it’s more important than that.
Quintas Quarterly Economic Review
Abolition of Property Based Reliefs
Recent News and Appointments
latestofferings
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Changing times for the Golf Industry
by John McHenry
John McHenry B&W

There is no doubt that in recent years the global economic recession has had a huge impact on the sport of golf most particularly throughout the established markets of Europe and America.

In the 1990s and early 2000s, selling memberships to golf clubs was a relatively easy affair as people were making money and weren't overly worried about club initiation fees and annual dues.

Now, the financial climate has changed. Club incomes are on the slide and many are fighting to survive as cash-strapped players look for less expensive fun resulting in many clubs scrapping expensive membership fees and offering cut-price deals to stem the exodus. Quite simply, the party is over and clubs will have to survive on a lot less revenue than they are used to.

So what are the core reasons behind the decline in the fortunes of many golf clubs?

First and foremost if we look at the newer golf courses and resorts, they predominantly have very high costs associated with their projects and have business models that typically require membership sales in excess of 300 people as well as the steady sale of property over a defined period in order to survive. They say that timing is everything in business and while there have been glorious successes, (Mount Juliet and the K Club both established in the early 1990’s), more often than not these ventures have not been able to generate the required amount of revenue to break-even. Therefore they have either had to be supported elsewhere (owner, banks etc) or have simply gone into receivership.

The vast majority of clubs in Ireland are traditionally private members' clubs, established a long time ago to facilitate the then growing demand for the game. Today, these clubs are very much threatened by a number of factors, such as:

  • The over supply of clubs in the market.
  • The abolition of upfront initiation membership fees which are so critical to many clubs.
  • Declining membership (people leaving the club and not being replaced).
  • Ageing membership – members moving to different categories, paying less money.
  • Declining revenues from the bar and dining room.
  • Declining green fee revenue due to competition and decrease in corporate and society participation.

Many of these issues can of course be fatal to clubs already operating efficiently but for most clubs there is still a lot which can be done to help alleviate their plight. The areas traditionally addressed by clubs are their cost structure such as:

  • Staff – They look at more efficient rostering of hours or perhaps even a reduction in staff numbers during the winter months.
  • A review of all costs such as insurance etc and an overhaul of all spending
  • Facilities – The reduction in clubhouse opening hours and the more efficient use of heating, lighting etc?

In terms of being pro-active, clubs need to regard themselves more as small businesses and embark on a proper marketing campaign which will require them spending money to promote themselves properly within the community with the message that they are open for business. They should really get over the message of how much fun and value for money golf is as a sport, not least for families.

Other areas that should be explored:

  • Group Buying – Why not form an alliance with your neighbouring golf clubs to group purchase core course materials?
  • Sharing of Machinery – Most clubs have machinery that is redundant for many months of the year. Why not create a relationship with other clubs to share or rent out your machinery to other courses, thereby reducing your costs.
  • Sharing of non-essential staff – Good cost savings can be made in this area with efficient rostering.
  • Clubs need to improve the membership and customer experience both on and off the course.
  • Clubs can built up loyalty programs and reward members for their good custom.
  • Clubs can facilitate the membership by offering them meeting rooms and conference facilities.
  • Clubs can proactively seek to encourage and promote junior programmes in their respective clubs thereby attracting more parents to engage with the club.
  • Socially clubs can become a little less formal and more accommodating towards the needs of the younger generations as they are the ones who will spend and guarantee its survival.

At a time when the profile of our professional golfers has never been higher, it is now essential that the entire golfing community works harder to promote themselves and the game. For many existing clubs, this may well mean a complete movement away from what has been the norm for many years. Like all small businesses, clubs must understand that without demand for their product and service they simply will not survive.  

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